Running

Somewhere between the Texas Panhandle cities of Lubbock and Amarillo on Tuesday, the odometer in Ken Orton’s 6-year-old Peterbilt tractor spun its millionth mile.

By Wednesday he was in Colorado, headed for Canada’s Northwest Territories with a flatbed load of oil field equipment he had picked up in Dallas. His greasy-gloved hand pulled a diesel fuel nozzle out of his tank at the landmark Johnson’s Corner Cafe and Truck Stop on Interstate 25 near Johnstown, and Orton checked the damage on the pump display.

The bottom line read 246 gallons. The top one, $437.63.

“You know, the only reason I do this anymore is because I just love it,” said Orton, an independent trucker from Blairmore, Alberta, Canada. “It’s gotten to the point where we’re actually paying to do this.”

Orton, along with every trucker and farmer in Weld County, could hardly have imagined a day when he would buy diesel fuel for $1.79 per gallon. Now the steady price rise, with occasional wild fluctuations, has driven Orton’s cost of doing business to the breaking point. At five miles to the gallon, he estimates it will take 680 gallons, and about $1,200, to get his load to the Canadian old field — about a third of the money he’ll be paid for the trip.

Trucking companies, independent drivers, farmers and anyone else who buys what used to be thought of as “cheap” fuel are coping with the highest prices in four years, and have another seasonal spike to look forward to before things get any better.

Recommended Stories For You

“It’s like five steps forward, one step back,” Johnson’s Corner fuel manager Ron Mock said, describing the wild price climb. “We see the price jump as high as 5 cents a day, sometimes for four or five days in a row, before you see a drop.”

The economics of the fuel market are close to imponderable: They are governed by free-market commodity futures trading, seasonal demand, regional supply, vast variations in local taxes — and global tensions. Mock spends more time than most trying to untangle the web of factors that dictate how his business runs.

LOW MARGIN

But Mock winds up, as always, with the bottom line. When the diesel price per gallon was 40 cents less about 18 months ago, the Johnson’s Corner profit margin was about 6 cents per gallon.

What now? Now that the price is pushing $1.80?

“We’re still at about 6 cents per gallon,” Mock said. “I can’t sell fuel to make money. We have to make money on other things.”

Like the legendary cinnamon rolls that helped land Johnson’s Corner as the No. 1 truck-stop cafe in America, according to cable television’s Food Network. “No, we won’t tell you what our margin is on cinnamon rolls,” Mock said.

Farmers, whose business becomes more and more mechanized as pressure mounts to increase yields, are also caught in the diesel squeeze. Bob Winter, who farms east of Windsor, said he has watched diesel prices rise about 45 cents per gallon since the 2003 planting season.

“When you spread that over several thousand gallons you’ll use during the season, it adds up in a hurry,” Winter said.

Winter’s only salvation, if it can be called that, is uncertainty about how much land he will plant to corn and other crops because of the drought conditions.

“We’re just not sure yet how much water we’ll have, so we haven’t used as much fuel this year as we normally would by this time,” Winter said. “But once you’ve got a crop planted, you’re committed and the price of diesel and fertilizer will be higher this year.”

The U.S. Department of Agriculture estimates farmers and ranchers will spend at least $8.4 billion on fuel this year, about the same as last year and a 29 percent increase over 2002 expenses.

Trucking industry associations are watchful of prices, but powerless to do much about them. Instead, their focus is on fuel conservation programs, and on offering assistance to trucking companies and independent drivers who struggle with the price burdens.

“I don’t think most people realize how difficult this is on the carriers,” said Greg Fulton, president of the Denver-based Colorado Motor Carriers Association. “They think the price is just passed on to shippers and consumers. But it’s not that easy.”

BANKRUPTCIES LOOM

Fulton said that if prices remain as high through the summer as they are now — and fuel industry sources say that’s all but inevitable — personal and business bankruptcies will follow. For each 10-cent rise in diesel fuel prices, about 1,000 truckers in Colorado will go out of business, he said.

“When we see these price spikes, we also see a lot of people going under,” Fulton said. “There’s about a two-month lag time for that. Once they’ve depleted their reserves, and the next big bill comes in, say, for insurance or registration, it puts them right over the top.”

Larger trucking companies fare better, especially those that have the muscle to contract for fuel prices at a time when the price is lowest. Mock said Johnson’s Corner has contracts with some haulers that fix the price at 2 1/2 cents above wholesale cost.

“All of that business is well below my operating costs,” Mock said.

The irony of the surge in diesel prices, in some cases outstripping the cost of regular unleaded gasoline, is that diesel’s selling point has always been low cost — ever since the time German engineer Rudolph Diesel invented the engine that burns it in 1893.

At Johnson’s Corner on Wednesday, the fuel’s $1.79 per gallon price was a penny higher that regular unleaded gas.

“The diesel and gasoline price lines have been criss-crossing for a while, now,” Mock said. One reason: Rising demand for diesel by a growing trucking industry, and falling demand for gasoline from drivers whose cars are more fuel efficient than ever before.

As Orton was preparing to hit the road for the Northwest Territories, another trucker was fueling up at the same pump island for a beer haul, a trip from Anheuser-Busch’s Fort Collins brewery to a distributor in Springfield, Mo.

At 80 cents a mile, Marvin Barker’s freight fare would put him perilously close to the break-even point. He said he’d rather be hauling frozen pizzas for $1.71 per mile, and was looking forward to the fresh-produce season that would see prices topping $2.

Barker, who has been trucking for 46 years from his Fort Scott, Kan., home, pondered his $246 fuel bill, mentally stacking it up against the $800 the brewer would pay him.

“You might as well just lay up at home,” he said. “It ain’t no fun to truck no more.”